Monday, March 03, 2008

It’s Worth $47! No, Wait, It’s Worth $22!

The least helpful call you will see today from Wall Street’s collective Finest surely comes from Pali Research and has to do with Cablevision.

Now, Pali may in fact be a fine organization, with terrific moneymaking ideas to its credit. But we have to call them as we see them, which, in this case, is none too helpful for investors who have owned the stock since last fall, when it was trading close to $40 on the heels of a Dolan Family takeover bid, subsequently rejected by the Cablevision board.Seems that, owing to doubts about the intentions of the Dolan family raised on last week’s earnings call, in which James Dolan admitted to grand intentions of buying music venues as opposed to trying to buy the company again, Cablevision shares rate a “Sell” as opposed to “Buy,” and the research firm’s target price for those shares, which was $47 per share last week, today drops to $22.

The Dolans, last we checked, have been running Cablevision pretty much since the Dolan family founded the company. Thus, we here at NotMakingThisUp nominate the Cablevision Call the Least Helpful Call You Will See Today.Of course, the day is still young.

2 comments:

In a similar vein, Tim Melvin at RealMoneySilver had a great interpretation of the pt-chasing-market prices-phenomenon...he referred to it as "packaged mediocrity." Here's a snippet:

"Wall Street strategists only suggest that investors reduce exposure to financial and housing stocks. If they think the sector is so bad, why do they own any?

Wall Street strategists only suggest that investors reduce exposure to financial and housing stocks. If they think the sector is so bad, why do they own any?

Because they suffer from what I call "packaged mediocrity." Wall Street has raised it to an art form. Once they get their hands on your money, they sell you on the idea of relative performance. They never want to get too far away from the make up of the S&P. That way, they can convince you to keep your money in the mutual funds and managed accounts that provide a steady stream of fees.

The mantra of the Street is not "performance for the investor" but the gathering of assets under management that will yield a rising stream of fees. Asset allocation should be a simple business. If you like something, buy it. If you don't, sell it. Don't rave bout the prospects for energy stocks and then allocate an extra percentage point to them. If you hate financials and love energy, sell the financials and buy more energy. Don't simply tweak your exposure to stay close to the index."